Carnival Continues To Expect Net Loss In H2 Of 2020

Cruise company Carnival Corp. & plc. (CCL,CUK,CCL.L) said it continues to expect a net loss on both a U.S. GAAP and adjusted basis for the second half of 2020. The pause in guest operations is continuing to have material negative impacts on all aspects of the company’s business.

The company paused its guest cruise operations in mid-March due to the global impact of COVID-19. he company expects to resume guest operations, with ongoing collaboration from both government and health authorities, in a phased manner.

The company expects future capacity to be moderated by the phased re-entry of its ships, the removal of capacity from its fleet and delays in new ship deliveries.

The 13 ships are expected to leave the fleet represent a nearly nine percent reduction in current capacity. The company currently expects only five of the nine ships originally scheduled for delivery in fiscal 2020 and fiscal 2021 will be delivered prior to the end of fiscal year 2021. In addition, the company expects later deliveries of ships originally scheduled for fiscal 2022 and 2023.

The company said it has already reduced operating costs by over $7 billion on an annualized basis and reduced capital expenditures also by more than $5 billion over the next 18 months. It has secured over $10 billion of additional liquidity to sustain another full year with additional flexibility remaining.

As of June 21, 2020, approximately half of guests affected have requested cash refunds. Despite substantially reduced marketing and selling spend, the company continues to see demand from new bookings for 2021.

For the most recent booking period, the first three weeks in June 2020, almost 60 percent of 2021 bookings were new bookings. The remaining 2021 booking volumes resulted from guests applying their future cruise credits or FCCs to specific future cruises.

As of June 21, 2020, cumulative advanced bookings for the full year of 2021 capacity currently available for sale remain within historical ranges at prices that are down in the low to mid-single digits range, on a comparable basis, including the negative yield impact of FCCs and onboard credits applied.

As of May 31, 2020, the current portion of customer deposits was $2.6 billion, the majority of which are FCCs. $121 million of the company’s customer deposit balance relates to third quarter sailings and $353 million relates to fourth quarter sailings.

The company continues to expect any decline in the customer deposits balance in the second half of 2020, all of which is expected to occur in the third quarter, to be significantly less than the decline in the second quarter of 2020.

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